2023 (12) TMI 1085 - AT - Income Tax

Penalty under Section 271(1)(c) deleted as AO failed to establish concealment or inaccurate particulars

The ITAT Surat held that penalty u/s 271(1)(c) cannot be imposed without a definite finding of concealment by the AO. The assessee filed return in ... Penalty u/s 271(1)(c) levied - AO held that assessee had concealed his income by not filing the return of income and not showing his income and paying due taxes thereon - concealment has come to notice as a result of scrutiny assessment proceedings only as had the case not been re-opened u/s 147/148 assessee would have succeeded in tax evasion - HELD THAT:- We note that assessee did not conceal the income and was in the bona fide believe that the said income, which was taxed u/s 147 of the Act, was not assessable under the Act. We note that there is no finding of the AO in the assessment order that assessee has concealed his income; rather Assessing Officer has accepted the returned income filed by assessee, as it is, (in response to notice u/s 147 of the Act). We note that in the case of CIT v. K.R. Chinni Krishna Chetty [1998 (6) TMI 5 - MADRAS HIGH COURT] has held that u/s 271(1)(c) of the Act the authority is given the discretion to levy a penalty if there is concealment of particulars of income and even as regards the quantum of the penalty there is a discretion. Of greater importance is the necessity for a definite finding that there is concealment, as without such a finding of concealment, there can be no question of imposing any penalty. In the assessee’s case, the AO has not given any finding in assessment order that the assessee had concealed any income or furnished inaccurate particulars of such income. He had simply accepted the returned income u/s 148 - penalty u/s 271(1)(c) will not be imposable. Decided in favour of assessee. Issues involved:The appeal challenges the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2013-14.Summary:Issue 1: Assessment and Penalty ProceedingsThe appeal concerns the penalty imposed by the Assessing Officer under section 271(1)(c) of the Act, based on the concealment of income amounting to Rs. 3,67,500. The penalty proceedings were initiated after the return of income was filed in response to notice u/s 148 for AY 2013-14. The Assessing Officer issued a notice u/s 271(1)(c) on 19.12.2018, which the assessee did not respond to. Subsequently, a show cause notice was sent on 02.04.2019, to which the assessee also did not reply. The Assessing Officer held that the assessee concealed income by not filing the return, leading to the penalty imposition.Issue 2: Appellate ArgumentsThe appellant argued that the assessee voluntarily disclosed business income and paid taxes, presenting a bona fide explanation. Referring to a similar case, it was highlighted that if the Assessing Officer merely accepts the returned income, the penalty under section 271(1)(c) is not applicable. The appellant also cited a judgment by the Hon'ble Supreme Court to support their case.Issue 3: Tribunal DecisionThe Tribunal noted that the Assessing Officer did not find any concealment of income in the assessment order but accepted the returned income filed by the assessee. Referring to previous decisions, including one by the Co-ordinate Bench of ITAT Delhi, it was concluded that without a definite finding of concealment, the penalty under section 271(1)(c) cannot be imposed. Therefore, based on the facts and legal precedents, the Tribunal deleted the penalty imposed by the Assessing Officer.Conclusion:The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty imposed under section 271(1)(c) of the Act. The decision was based on the lack of evidence of concealment of income and the legal precedents supporting the appellant's case.